The haulage and HGV sector in the UK is big business: last year, statistics from the Department of Transport found that there were 4,706,300 HGVs and LGVs registered in the UK, and that 77% of all UK freight goods are moved by road.
Working within the haulage industry can be incredibly profitable, but it demands some heavy costs to start and grow your business. Haulage assets can be expensive, and unfortunately that can lead to a big draw on your working capital and cash-flow. This is where asset financing can be of major benefit to the haulage sector.
What is asset finance?
Firstly, let’s explore what we mean by ‘asset finance’. Asset finance is a finance option which businesses can use to grow, by acquiring much needed vehicles and equipment without having to pay upfront. Instead of buying the asset straight out, you will pay a regular amount to use the asset over an agreed period, avoiding the full cost of buying outright.
Waiting until you’ve got enough cash upfront to purchase an asset can slow down your business growth, which is why asset finance can be so valuable to a business: it allows you to obtain the assets you need for your business without having to wait.
Typical transport assets that can be financed include:
- MOT test equipment
- Workshop equipment
- Trucks (HGVs)
- Vans (LCVs)
How can your haulage business benefit from asset finance?
The costs of acquiring and operating trucks and vans, ever-increasing fuel prices, and inevitable maintenance expenditures can make it difficult to keep healthy cash flow if you work in the haulage industry.
Asset financing for haulage allows you to spread the costs. You will repay a lender while your vehicles are already working for your business.
There are a number of benefits of asset financing, such as:
– The facilities provided by most funders will not affect your bank borrowings.
– In contrast to traditional loans, asset finance could actually make it easier to raise funds for additional finance needs.
– Avoiding paying for an asset outright, and spreading the cost instead, can help maintain a healthy cash flow for your business, and maintain control over working capital.
– Asset finance allows you to grow without the limits of saving up to purchase an asset. It means you can access the latest equipment and technology when you need it. This ultimately gives you an edge over your competitors.
– There may even be potential tax benefits. The availability and value of any tax reliefs will depend on your individual circumstances: your finance facilitator can advise on this.
What Asset Finance options are available to the haulage sector?
There are a number of options available to you if you’re considering asset finance for your haulage or HGV business.
1. Hire Purchase
Hire purchase asset finance for haulage means that your vehicle is hired until you pay enough to purchase and own it outright. This option helps you manage your cash flow by spreading your payments regularly over a set period of time.
2. Lease Finance
Leasing is probably the most flexible asset financing option. Leasing allows you to acquire new vehicles, and upgrade them much more frequently.
3. Contract Hire
This method of asset financing for haulage allows you to acquire a vehicle, with the finance company owning the vehicle and hiring it to you. The benefit of this is that you get to use the latest vehicles but avoid the risks of depreciation.
Asset Finance for the Haulage sector: how PMD can help
At PMD, we don’t want our clients’ haulage businesses to stall simply because they are hindered by high up-front costs.
To help you get your business off the ground, or expand your current fleet, we work with over 100 lenders and can open up a number of flexible, independent and competitive funding lines to drive your business forward.
PMD will take the hard work out of securing asset finance, liaising with funders on your behalf to ensure the best possible terms are secured, leaving you free to focus on running your business.
PMD can source facilities for almost any business asset. We can structure these with low deposits, VAT deferrals and extended terms to meet your cash flow.
If you’re considering using asset finance for your haulage business, get in touch today to see how PMD can help.